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The Special Treat for Alaska Lurking in the Senate’s Health Care Plan

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By Josh Barro, Business Insider

September 20, 2017

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On Tuesday evening, Robert VerBruggen of National Review noticed something odd: The financial projections produced by Sen. Bill Cassidy's office showed that, in 2026, his healthcare proposal would award each state almost precisely $4,400 in federal subsidy per "eligible beneficiary" — except Alaska, which would receive $6,500, or 48% more than everybody else.

Making things odder: Neither VerBruggen nor I could locate the provision in the bill that seemed to authorize this Alaska Purchase.

So I asked a staffer in Cassidy's office and was told they are revising the projections. The spreadsheet came down off the senator's website after I inquired about it. (Click here for an image.)

The staffer said a forthcoming version of the projections would reflect a bonus for low-density states whose healthcare costs are more than 20% above the US mean. These states would get a bump in the rate they're paid per beneficiary to account for their higher costs.

The bill defines a "low-density state" as one with fewer than 15 residents per square mile. There are five such states, but according to Kaiser only two of them have per-capita health spending more than 20% above the US mean: Alaska and North Dakota.

There's no North Dakota bonus reflected in the spreadsheet from Cassidy's office; maybe that will change in the new projections, or maybe they're relying on different figures that put North Dakota (22% above mean, by Kaiser's estimate) below the 20% cutoff. Maybe North Dakota's representatives will vote on this bill with no idea what its financial treatment of North Dakota would be — that would be consistent with the rest of this process.

Alaska has very high healthcare costs and currently receives large per-person federal subsidies to help finance healthcare. Because Alaskans who participate in Obamacare are unusually reliant on federal healthcare subsidies, most of the Republican healthcare proposals have tended to be very bad for the state. But this Alaska Purchase provision would seem to result in Alaska experiencing only a fairly modest cut in spending per capita, instead of the enormous ones that Graham-Cassidy would impose on other high-cost states like Delaware.

Delaware, because it's high density — or perhaps because it votes Democratic — would be out of luck.

We'll see what the new projections show, and whether this special deal for Alaska is enough to win over the support of Sen. Lisa Murkowski of Alaska, who has opposed previous healthcare repeal plans. Murkowski has raised varied objections to prior healthcare bills, including to their efforts to defund Planned Parenthood, which this bill would also seek to do.

Because the overall cuts in Graham-Cassidy are large, Alaska would lose money relative to current law despite its special treatment (at least according to the last version of the projections posted by Cassidy's office) which may be a reason Alaska's independent governor has announced opposition to the bill.

It's really great that everyone has to figure these extremely consequential matters out on the fly because Republicans in Congress want to reform healthcare on the back of an envelope.